23/11/2017 Daily Politics


23/11/2017

Jo Coburn is joined by economist Linda Yueh, plus there is reaction to the Budget from politicians and the thoughts of Robert Chote, Tom Newton Dunn and Polly Toynbee.


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Transcript


LineFromTo

Hello and welcome to

the Daily Politics.

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In Yorkshire with Theresa May this

morning, it's all smiles.

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But are Philip Hammond's Budget

promises to cut stamp duty

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for first-time buyers

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and the three billion for Brexit

preparations being overshadowed

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by bleak economic forecasts?

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The gloomy news was delivered

to Mr Hammond

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by the Office

for Budget Responsibility.

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Dragged down by low productivity,

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Britain will grow far

slower than expected.

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We speak to their chairman,

Robert Chote, about the worst

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downgrade since 1983.

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But economists don't always

get everything right.

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For example, they didn't foresee

the 2008 financial crash.

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We debate how reliable economic

computer modelling really is.

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I did take the precaution of asking

my right honourable friend to bring

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a packet of cough sweets just in

case.

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And is it "Funny Phil" now

rather than "Fiscal Phil"?

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The Chancellor peppered his Budget

statement with a series of jokes,

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but did they add to his productivity

in delivering the Budget?

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All that in the next hour

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and with us for the whole

of the programme today is someone

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who probably enjoys Budget Day

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in the way the rest

of us enjoy Christmas -

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the economist Linda Yueh.

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Welcome to the programme.

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It looks as if Philip Hammond has

overcome the short-term political

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challenge of delivering

a controversy-free Budget.

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Yet while the Chancellor has

steadied the Tory ship,

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for now at least, the British public

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may well feel much

more gloomy today.

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The dire state of the public

finances -

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and the growth

forecasts in particular -

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provided him with little headroom

to go on a spending spree.

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But he did find money to scrap stamp

duty for the majority of first-time

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buyers and also to set aside

£3 billion for preparations

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for the UK to leave the EU.

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Well, earlier this morning,

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the Prime Minister was

asked what she thought

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of Philip Hammond's performance.

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The Chancellor did a very good job

yesterday. He was setting out how

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Willie will ensure we have an

economy fit for the future. But the

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Chancellor and I agree that what the

Budget was about was jobs for people

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up and down the country. It was

about insuring people are in work

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with that income for their family.

It's about building the homes that

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they need, and it's about ensuring

that we seize the opportunities for

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the future.

Linda Yueh, what were

your impressions of the Budget?

I

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was certainly worried about how

significantly downgraded economic

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growth was, and this came on top of

the fact that inflation is expected

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to be higher than 3%. So the economy

is only going at 1.5% for the next

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five years, and we have high

inflation. That is really going to

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squeeze incomes. That is why this

Budget was a real change in course

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for the government. In other words,

almost everybody I can recall, and

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it is a bit like Christmas like me

when it comes to Budget Day(!), they

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have always stressed how every

Budget is fiscally neutral, so money

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raised is by cutting taxes, but in

this case they wanted to stimulate

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the economy. In 2019-20, we were

expecting to run a Budget surplus of

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£10 billion. But now after this

Budget, or going to have a Budget

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deficit of £35 billion. Half of that

is because growth has become so slow

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that we won't get as much tax

revenue. But half of that is because

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I don't think the Chancellor has any

choice but to try to spend more in

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order to raise growth. And by this

measure, we will not have a Budget

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surplus until 2030. So he has

abandoned the idea of getting to a

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surplus.

If we remember, George

Osborne said we would eliminate the

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deficit by 2015. So it is going to

be 15 years late. But in your mind,

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did he have to add to borrowing in

some way in order to stimulate the

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economy?

I think he does. The main

problem with slow growth is that it

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makes your Budget deficit worse.

Slow growth means there is less tax

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revenue. So a lot of what he is

spending is on investment to boost

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productivity. Another big portion of

what he is spending it on is to put

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out fires around the NHS, preparing

for Brexit and houses, which is

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important. If he doesn't raise

growth, some may wonder why he

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didn't do more, why he is allowing

the economy to go into the doldrums

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at a much lower growth rate for the

next five years.

We are joined now

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by the #'s political editor Tom

Newton Dunn and Guardian columnist

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Polly Toynbee.

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Tom Newton Dunn, your newspaper and

the Daily Telegraph give the

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Chancellor relatively favourable

responses to the Budget. Why, when

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the UK will have one of the slowest

rate of growth in the G7 and

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productivity has been downgraded?

Relatively is the key point. We are

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not happy with everything he did

yesterday. In terms of the bigger

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point you have heard from your guest

in the studio, much of the problems

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faced by the Chancellor are not of

his own making. It is the biggest

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productivity downgrade since records

began in the biggest flat-lining of

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productivity since before the battle

of Waterloo, since 1812 full

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stoppages out of his control. So I

would agree with that analysis. I am

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not sure he had much choice. He had

to spend that massive £26 billion

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war chest he built up, the rainy day

Budget for tough times for Brexit,

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which begs the question, what on

earth is the government going to do

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next? If you look at the path of

deficit reduction now, it is barely

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going down. The deficit is still

going to be 35 billion in a few

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years' time. So I think it is

slightly dire straits now. This was

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an action by the Chancellor to keep

the government afloat in the short

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term, prime pump in all the money he

had into the economy to see what

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happens. He was even borrowing out

of his departmental spending

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reserve. He was taking 2 billion out

of that to plough into the economy.

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So it looks like he has done

everything he can and it is in our

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case of waiting to see if it works.

And there is of course the politics

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behind that. We will come to that in

a moment. Polly Toynbee, £25 billion

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of new spending.

Will that be

welcomed by Labour? It is an

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incredibly small sum. We are where

we are because of what this

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government decided to do. If you

look at the growth rate, it was

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going well when George Osborne took

over. But from his very first Budget

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in June 2010, growth fell off a

cliff and never recovered. That is

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what happens if you have an

austerity Budget and if you cut into

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the headwinds of a recession, and it

got worse and worse. The longest, as

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Tom says, that we have ever had, for

the very reason of taking this

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antique Ainslie in view. Keynes

would have said to the

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counterintuitive thing, to borrow

and spend into a recession. Growth

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is what pays off your debt. Growth

and productivity are the only things

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that can pay off your debt. So you

have to borrow, like a family would

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for a mortgage, in order to increase

your wealth in the longer run.

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Politically, let's talk about that,

Tom. He has survived. He hasn't

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tripped up on a banana skin, which

he did earlier in the year with his

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cut of national insurance

contributions for the self-employed.

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Was that the sole aim, to keep his

job and therefore keep the

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government going?

Yes, not just to

keep his job, but also to keep

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Theresa May in Number Ten. It was a

fascinating political U-turn

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yesterday, from Fiscal Phil, the man

who prides himself on having a tough

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hand on government spending across

all the departments from the MoD to

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the Foreign Office, now a year on,

he is spending like Corbyn.

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Everything he can get. He is not

spending the way Labour had

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proposed.

Polly should be delighted.

She's muffling her delight.

It is a

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very small sum. When he says 15

billion more for housing, it turns

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out that it is over five years. It

will build very few homes.

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Overnight, people have been

analysing some carefully. When it

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comes to Universal Credit, 300

million gets you almost nowhere in

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the appalling state of people moving

on to Universal Credit. These are

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little token sums. Those who didn't

follow them closely cheered on his

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side of the House because it sounded

good. A bit of something for

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everyone, a tiny bit for the NHS,

less than half of what it needed.

I

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agree that he hasn't spent things in

the right way, if that is what Polly

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is saying. I'm not sure where he

could spend more, because if we

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borrow more, the deficit will go up

the market would lose credibility

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and then we are into a sovereign

debt crisis. The problem is that

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they spent in the short term and

they have sought that Universal

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Credit and given money to the NHS,

but they have gone nowhere near

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tackling other problems. I was

deeply unimpressed by the housing

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measures. And also social care is

another huge problem. They're all

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the great demographic problems

facing the country which were left

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and tackled and getting worse by the

day. At some stage, some government

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will have to tackle them.

Finally,

Polly Toynbee, on trust with the

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economy, bearing all of that in mind

from both of you, why is it that got

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the Budget, the Shadow Chancellor

and Labour leader were trusted less

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on the economy than Hammond and May?

I don't think that will last long as

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people unpick this Budget. But more

to the point, overshadowing all

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this, despite this appalling long

recession which has been created by

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government austerity policies, we

have Brexit and what is this

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government's fault on the fault of

the fanatics on its front benches

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and the backbenchers.

Is it not the

fault of the people who voted for

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it?

Maybe, but they were lied to by

the likes of you and they still are.

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They would say there were lies on

both sides, Polly Toynbee.

It is

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turning out that the Remain side

were painfully right about the

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dreadful economic consequences and

much worse to come.

Thank you both

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very much.

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Now it's time for our daily quiz.

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Shadow Education Secretary Angela

Rayner has announced on Twitter

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that she has just passed a rather

important milestone in her life,

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so our question for today is...what?

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a) She's just bought her first

house, b) She's got a degree,

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c) She's passed her driving test

or She's become a grandmother?

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If it is her first home, she can

benefit from the stamp duty measure.

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At the end of the show, Linda

will give us the correct answer.

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So, it was the gloomy

outlook for the UK economy

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which overshadowed much

of Philip Hammond's Budget.

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The official forecasts for the UK

economy are delivered

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to the Treasury by the Office

for Budget Responsibility.

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The OBR was established in 2010

by then-Chancellor George Osborne

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to end a system under

which the Treasury produced its own

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economic growth estimates.

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Philip Hammond yesterday

delivered their latest

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downgraded predictions as part

of his Budget statement.

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Regrettably, our productivity

performance continues to disappoint.

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The OBR has assumed, at each

of the last 16 fiscal events,

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that productivity growth

would return to its pre-crisis trend

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of about 2% a year,

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but it has

remained stubbornly flat.

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So today, they revised down

the outlook for productivity growth,

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business investment and GDP growth

across the forecast period.

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The OBR now expects to see

GDP grow 1.5% in 2017,

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1.4% in 2018, 1.3% in 2019-2020,

before picking back up to 1.5%

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and finally 1.6% in 2022.

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The Chairman of the Office

for Budget Responsibility, or OBR,

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Robert Chote is here with us now.

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You live for these events, but grim,

Dyer, dismal, these are some of the

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words being used this morning to

describe Britain's economic

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forecast. In your view, how bad is

it?

Basically, the economy has been

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growing less quickly than expected

this year, which extends the story

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for 2017. More importantly, we have

taken a more pessimistic view over

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the next five years. That is a

reflection of the fact that growth

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in productivity, which is the amount

of output you get out of every hour

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that people work, has been growing

very slowly over the last ten years

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relative to the three or four

decades that came before it. A while

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back, people would have said you can

probably now that down to specific

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reasons related to the financial

crisis. But as this period of

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weakness has got longer and longer

the crisis recedes further into

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history, some of those explanations

fall away. Therefore, we have

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decided to place more weight on this

relatively weak period as a guide to

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what is coming. Another reason for

that is that this is also a global

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problem and not just a domestic one.

If you look at the way in which our

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American counterparts have been

changing their forecasts, the

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Congressional Budget office, there

is a similar pattern.

But you have

0:14:450:14:48

revised Britain's growth forecast

down substantially since March.

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Let's look at the graph. What has

changed since then? You were more

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optimistic just months ago, you

would've had those figures then?

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When you are looking over this

period, you have to make judgments

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as you are going along, and do we

see are there reasons why it'll pick

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up? You don't want to focus on the

latest data, we have seen false

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dawns come and go. It is more a

question of looking back at this

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remarkably unusual period in recent

economic history and making a

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response to that. The economy will

grow at less than 2% for the a least

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the next five years, how much

smaller will the economy be over the

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next five years? Well, I mean, you

basically summed it up there. We

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used to get the idea that you would

expect large, mature industrial

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economies like the UK to grow by a

bit over 2%, maybe 2.5% a year and

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at the moment we are assuming 1.5%

is, as it were the new normal.

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Obviously you can add up the

ditches, however many years you go

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out to get as large a number as you

like.

How much will be taken out of

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the economy? The figures of £65

billion taken out of the economy

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over the next five years, are those

the figures that you recognise?

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Well, the potential size of the

economy is about 2% smaller at the

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end of the forecast horizon than it

would otherwise be. Obviously you

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can get as large a cash number as

you like by moving out and making

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the comparison.

Right, truth is,

forecasts are rarely correct. You

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said so yourself. And they are

routinely revised. It is entirely

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possible the Chancellor will prove

you wrong?

It is entirely possible

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the outcome is a 50/50 chance as to

whether it is higher or lower. One

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of the things we do in the report is

run alternative scone oar yes, sir

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for public finances on the basis of

what happens if productivity growth

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revives to the rates we saw prior to

the financial crisis and what

0:16:510:16:54

happens if basically the last ten

years are the new normal? Now we are

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not as pessimistic, there are techno

pessimists out there who say we've

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had three industrial revolutions

that's your lot you will not see the

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revival in growth. I don't think we

are in that camp. There are reasons

0:17:080:17:12

to think productivity will pick up,

unemployment is falling, that will

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produce more pressure on firms to

work things more productively so we

0:17:160:17:20

don't give up hope of some recovery

there.

That means, the forecast

0:17:200:17:25

could be more optimistic. It could

be worse, then?

I think there is a

0:17:250:17:29

probability it could go either way.

To give awe rule of them in terms of

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what the growth rates mean for the

size of the British economy. You

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take the number 70, divide by the

growth rate that gives you the

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number of years it takes for an

economy to double in size. So the

0:17:380:17:42

British economy grows, at say 2%,

let's keep the maths simple. 7 #0e

0:17:420:17:46

divided by two, we expect it to

double in size in 35 years, if it

0:17:460:17:52

grows closer to 1%, the economy

doubles in size in 70 years, that's

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why the small ditcheses in growth

rates have massive impact in terms

0:17:570:18:00

of our living standard.

Right, let's

have a look at Brexit. You said

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yesterday the Government provided

the OBR with no meaningful basis on

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which to form a judgment on Brexit.

Do your forecasts take into account

0:18:080:18:13

Brexit or not?

They did. We made an

adjustment in the first forecast we

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produced after the vote to Leave so.

That was the November forecast last

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year. And we haven't basically

changed the broad judgments around

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Brexit, both in terms. Process, and

in terms of the sorts of

0:18:260:18:30

implications it would have for

things like productivity, trade

0:18:300:18:34

intensity, migration we did then. So

the announcements we made or the

0:18:340:18:38

updated forecast yesterday is much

more about looking at this

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historical pattern, the fact that

this is a common global feature,

0:18:420:18:45

rather than that we have looked

again specifically at Brexit and

0:18:450:18:48

said - we think the outcome of this

will be different from what we

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thought a few months ago.

What

information did the Government give

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you on Brexit?

We had and we have

asked for no more than what is the

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in the public domain. I wouldn't

come want to come here and say - of

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we have produced this set of numbers

that the Government has told me

0:19:040:19:07

something about Brexit I can't

share. The reason we ask this, when

0:19:070:19:10

we are preparing the forecast it is

useful for us to know if the

0:19:100:19:13

Government is going to put into the

public domain new information that

0:19:130:19:16

may be relevant, which is why we

ask.

And they are not?

Well as you

0:19:160:19:21

see we have the information that's

available to everybody else and we

0:19:210:19:24

wouldn't want to be doing tonight

basis of private information.

Well

0:19:240:19:28

it is not meaningful then, to use

your words f stlnt enough

0:19:280:19:32

information in the public domain to

make that judgment?

Well the

0:19:320:19:35

judgment, as I say, is based on

series of broadbrush assumptions

0:19:350:19:40

Which? Think would be consist went a

wide variety of potential outcomes.

0:19:400:19:45

Under most circumstances, you would

expect import growth and export

0:19:450:19:48

growth to be weaker for a period of

time than they otherwise would be,

0:19:480:19:52

that business investment will be

weaker because people will be

0:19:520:19:54

uncertain for the period that they

don't know what the end point is

0:19:540:19:59

going to be but what we don't done

is come up with a envelope and the

0:19:590:20:03

last page conclusion is where we end

up with the negotiations and pinning

0:20:030:20:06

the economics numbers to that.

Right. Probably wise. Jacob

0:20:060:20:11

Rees-Mogg, the Tory MP says the OBI,

yourselves work on false

0:20:110:20:18

assumptionless given to you by the

Treasury, he would like you to be

0:20:180:20:22

more optimistic on the tudgets of

Brexit?

Well, I wouldn't describe it

0:20:220:20:26

as false assumptions. I think Jacob

would take the view that Brexit

0:20:260:20:30

creates the opportunity for a whole

variety of other policy changes that

0:20:300:20:34

this gives a greater freedom to do

that which you could then

0:20:340:20:37

incorporate. Obviously we are basing

our forecasts on what current policy

0:20:370:20:40

S so this is one of the reasons why

it is difficult to nail it down very

0:20:400:20:45

precisely, if we get close to a

particular outcome, the Government

0:20:450:20:49

may announce other sets of

accompanying policy changes and

0:20:490:20:53

maybe Jacob sees scope in those to

provide a better outcome.

Do you

0:20:530:20:58

have any sympathy with what Jacob

Rees-Mogg says in terms of the

0:20:580:21:01

assumptions that both the Treasury

and Office for Budget Responsibility

0:21:010:21:04

are working from?

I think it is very

difficult for them. I thi, as Robert

0:21:040:21:08

says, you can only work with the

information that is currently given.

0:21:080:21:12

Their credibility would be in doubt

if they were to, I think deviate

0:21:120:21:15

from that and so, in their

forecasts, as we just said a moment

0:21:150:21:19

ago, it could be much better or it

could be much worse. It is based on

0:21:190:21:24

productivity but an element of t I

would surely think is also Brexit

0:21:240:21:27

because obviously the outcome could

be better or could be worse, based

0:21:270:21:33

on however the negotiations go.

There was one phrase, if I may, if I

0:21:330:21:36

could pick up with Robert that I

found in your report, it is the idea

0:21:360:21:41

of fiscal illusion. This is a really

rather, I think important concept

0:21:410:21:46

because we have been talking about

the Budget and the Government says

0:21:460:21:53

they will meet their fiscal target

of 2% of GDP of the structural

0:21:530:21:58

deficit but they have done by that

selling shares in RBS and in little

0:21:580:22:02

bit of what you describe yourself as

fiscal illusion. Does that actually

0:22:020:22:06

mean we shouldn't put too much

credence by this illusion that's

0:22:060:22:10

getting us to our deficit target?

Well I think it is always very

0:22:100:22:12

important. The fiscal illusion is

basically getting at the idea that

0:22:120:22:16

there are some changes which can

make the official numbers you are

0:22:160:22:19

looking at and that the Government

maybe targeted better, without

0:22:190:22:23

fundamentally changing the

underlying health of the public

0:22:230:22:25

finances and a key part of our job

is to raise a flag when those sorts

0:22:250:22:29

of things happen. Asset sales are a

very good example. If you sell

0:22:290:22:35

shares in RBS, for example, you end

up with that reducing the

0:22:350:22:38

Government's stock of debt. But in

fact if a Government owns an asset

0:22:380:22:43

and sells it for roughly what it is

worth. It is no better or worse off,

0:22:430:22:47

it has swapped one asset, shares in

a bank, for a lump of cash. We need

0:22:470:22:59

to flag that up. The other big...

Housing associations.

The statical

0:22:590:23:04

decision to count them as part of

the private sector rather than

0:23:040:23:07

public sector but do we really

believe the Government's behaviour

0:23:070:23:11

if the housing association sector

got into difficulties would be

0:23:110:23:14

markedly difficult because a

newspaper of statisticians in

0:23:140:23:16

Newport have applied the

international rules and concluded it

0:23:160:23:19

is one side of the boundary or the

other?

Is that the illusion?

Well,

0:23:190:23:24

it helps in both reducing the level

of Government borrowing and the

0:23:240:23:28

level of Government debt because you

are taking off the borrowing and the

0:23:280:23:32

debt of the housing association. The

Government has been remarkedly

0:23:320:23:37

candid about why it has taken the

measures in deregulating the sector

0:23:370:23:42

to do that. They gave evidence to

the House of Lords to say - we are

0:23:420:23:48

doing this to persuade the

statisticians to get this off the

0:23:480:23:50

books.

Criticising the Government's

stamp doubty property, you say house

0:23:500:23:57

price also go up. Do you accept it

is quite a political statement to

0:23:570:24:02

make within hours of the Budget

being delivered Its not a criticism.

0:24:020:24:07

Now not saying it shouldn't happen.

It is explaining how it'll feed

0:24:070:24:11

through into the economic and

fiscaler if cast. You can certainly

0:24:110:24:14

take the view that the policy is a

good or bad policy. We have to

0:24:140:24:18

describe what impact it has.

But

that is a critcy. If you say the

0:24:180:24:23

bhan gainers are people who own

their own proort when it is supposed

0:24:230:24:26

to help first time buyers who

haven't been able to get up and that

0:24:260:24:29

house prices will go up and act as a

stimulus. That's a criticism

No it

0:24:290:24:35

is a statement of the facts. If

house prices go up. It gives first

0:24:350:24:42

time buyers who purchase properties

that they otherwise wouldn't have

0:24:420:24:45

blown able to afford but they are

more expensive and I expect with

0:24:450:24:50

#23is time buyers, it is the act to

get on the ladder even if the

0:24:500:24:55

property is more expensive, than a

good thing about that policy. I

0:24:550:24:58

wouldn't read it that as a criticism

of the policy it is a criticism of

0:24:580:25:03

what it does.

0:25:030:25:09

The growth forecasts may have been

revised down but the Chancellor

0:25:090:25:11

still had some money to give away.

0:25:110:25:13

Let's have a look

at the key policies.

0:25:130:25:15

Philip Hammond set aside £3 billion

over next two years to prepare

0:25:150:25:18

the UK for every possible outcome

as the UK leaves the European Union.

0:25:180:25:21

For housing the Chancellor

outlined a £44 billion

0:25:210:25:28

government support package,

to help meet a government target

0:25:280:25:31

of building 300,000 new homes a year

by the middle of next decade.

0:25:310:25:34

And stamp duty will be abolished

immediately for first-time buyers

0:25:340:25:41

purchasing properties

worth up £300,000.

0:25:410:25:42

The young person's railcard will be

extended to 26-30-year-olds

0:25:420:25:46

from next year, saving a third

on off-peak railfares.

0:25:460:25:50

The NHS in England will receive

an extra £2.8 billion worth of extra

0:25:500:25:53

funding for front line services.

0:25:530:25:55

With £350 million available

immediately to address

0:25:550:25:57

pressures over this winter.

0:25:570:26:06

The Chancellor proclaimed "maths

for everyone" with £600 for each

0:26:100:26:12

additional pupil taking A level

or Core maths.

0:26:120:26:14

A £40 million teacher training

fund will be established

0:26:140:26:16

for underperforming schools

in England, working out

0:26:160:26:18

at £1,000 a teacher.

0:26:180:26:19

And changes to Universal Credit

to bring the overall waiting time

0:26:190:26:22

down from six weeks to five.

0:26:220:26:26

Joining us are the Justice

Minister Dominic Raab

0:26:260:26:28

and the Shadow Economic Secretary

to the Treasury.

0:26:280:26:34

Welcome to both of you. Jonathan

Reynolds, I didn't say your name,

0:26:340:26:40

which is important, of course.

Dominic Raab, Philip Hammond started

0:26:400:26:45

his statement on the Budget

yesterday saying will - there is a

0:26:450:26:49

bright future for Britain. Are the

resolution association disagree say

0:26:490:26:55

there'll be 17 years of pay

stagnation.

Interestingly the

0:26:550:26:59

Resolution Foundation also said that

those on the lowest I parks the

0:26:590:27:02

proportion on the lowest pay is at

its lowest level since the 1980s. I

0:27:020:27:07

think we have had some headwinds. I

think the economists are not quite

0:27:070:27:10

clear between themselves as to some

of the forecasts which is

0:27:100:27:12

interesting, the conversation you

have just had. The reality is there

0:27:120:27:15

are all these predictions of doom

Ian gloom and precession and we have

0:27:150:27:20

modest growth inhe has put in a

modest stimulus in and things like

0:27:200:27:25

the £08 billion extra in partnership

with the sector on tech and R&D that

0:27:250:27:31

will help boost in the long-term

productivity. He dealt with the

0:27:310:27:35

issues around here and now,

extending personal allowance, fuel

0:27:350:27:41

duty and laid foundations to deal

with the productivity. I think that

0:27:410:27:44

compares the credible, balanced

approach he took with John McDonnell

0:27:440:27:47

this morning on the Today programme

saying spending and borrowing more

0:27:470:27:52

pays for itself.

Right, but wages

won't return to the 2007 levels,

0:27:520:27:58

pre-crash levels until 2025. That

squeeze is going to really hurt

0:27:580:28:03

families. And it's the longest fall

in living standards since records

0:28:030:28:07

began. Is that something you are

proud of?

I think really conscious

0:28:070:28:12

of the priors on low and middle

income fwamlies but I would say the

0:28:120:28:16

average tax pay letter take home

£1,075, a basic rate taxpayer than

0:28:160:28:23

under Labour Government in 2010. We

had that statistics from the

0:28:230:28:28

Resolution Foundation, the

proportion...

Except one-third of

0:28:280:28:30

households, this is what you are

saying the poorest third of

0:28:300:28:33

households are set to be more

thanneds 700 a year worse under the

0:28:330:28:37

plan?

Under the enfundamentals of

the economy.

Answer the question

I

0:28:370:28:41

will answer the first then come

back. Inflation has reached its peak

0:28:410:28:45

of 3% in October and is now coming

down, so it'll ease the pressure.

It

0:28:450:28:51

hasn't

If you listen to what the

Bank of England said last week n

0:28:510:28:54

October the 3% was the peak and

it'll start to come back down.

It

0:28:540:28:57

hasn't come down yet

I'm in the

doubting there are pressures, but it

0:28:570:29:01

is not all doom and gloom and it was

great to here a Conservative

0:29:010:29:05

Chancellor who didn't vote for

Brexit say - come on, there is there

0:29:050:29:09

are risks, but even greater

opportunities and we will grasp

0:29:090:29:11

them. We need candour in this

country.

Well -- can do. Well you

0:29:110:29:16

talk about can do but he talked

about a bright future for working

0:29:160:29:19

families and if they are not looking

forward to wages getting to the

0:29:190:29:22

stage they were prethe crash, what

are they going to be looking forward

0:29:220:29:25

to?

I don't accept that. The

Resolution Foundation is a

0:29:250:29:31

think-tank and does good work. And I

have cited them.

Cited the bits you

0:29:310:29:34

like and not what you don't. Can you

explain that poorest households are

0:29:340:29:38

going to be £700 a year worse off?

We went through and it was

0:29:380:29:45

interesting hearing Robert Chote

hark back to the crash, but we have

0:29:450:29:49

dom through, employment at record

highs, three-quarters new jobs

0:29:490:29:53

full-time and on things like the

national living wage, the extension

0:29:530:29:57

of the personal allowance,

cancelling the planned fuel duty

0:29:570:29:59

hike, we are doing things that deal

with the pressures of the here and

0:29:590:30:02

now, but also take the long-term

investment like infrastructure

0:30:020:30:07

technology, that will boost wages

through productivity gains.

He did

0:30:070:30:11

the minimum he could the with

headroom he had which is little when

0:30:110:30:14

we look at big figures, you talk

about the national living wage but

0:30:140:30:18

George Osborne pledged it would

reach £9 by 2020, that will not

0:30:180:30:22

happen now

Hold on. We are in 2017,

it is going up to April £7.83. We

0:30:220:30:28

have produced that

Will approximate

hit £9?

Well that's forethe

0:30:280:30:33

Chancellor and we've scrutinised

what he said yesterday. We can say

0:30:330:30:35

it is going up to £7.83. We are

cutting the amount of income tax

0:30:350:30:41

people are pay, the average taxpayer

but over £1,000 each year compared

0:30:410:30:44

to 2010 but we have to be balanced

and responsibility. We cannot do as

0:30:440:30:47

John McDonnell and Labour said first

thing this morning - by throwing

0:30:470:30:51

money at problems, it is not

credible. What he has done in

0:30:510:30:55

challenging times is a balanced,

credible approach...

0:30:550:31:02

But balance in favour of whom?

Philip Hammond has said he wants to

0:31:020:31:08

put £3 billion aside for Brexit

preparations, but only £350 million

0:31:080:31:12

extra funding for the NHS this

winter. Which is more important to

0:31:120:31:16

you?

They are both important.

Then

why has Brexit got £3 billion and

0:31:160:31:22

the NHS only 350 million?

Studies

from a standing start and

0:31:220:31:27

contingency plans for Brexit. The

NHS is getting huge amounts of extra

0:31:270:31:31

money.

Does the NHS not deserve more

money?

I think the NHS is getting

0:31:310:31:38

extra investment.

Not the 4 billion

that Simon Stephens said is

0:31:380:31:41

necessary.

We have followed Simon

Stephens' route map to this. More

0:31:410:31:47

money is going in, but we also need

to reform the NHS. Compared to 2010,

0:31:470:31:53

someone is paying two thirds less

income tax. The millionaires are

0:31:530:31:58

paying 14% more.

Let's look at the

other bits of this balanced

0:31:580:32:03

approach, Jonathan Reynolds. Do you

oppose the scrapping of stamp duty

0:32:030:32:07

for first-time buyers?

If a Labour

government presented the figures we

0:32:070:32:10

saw yesterday, Dominic, who I have

tremendous respect for, would be

0:32:100:32:13

laying into those figures. The stamp

duty cut was an Ed Miliband policy

0:32:130:32:25

originally.

It wasn't just his, it

was proposed in your manifesto. So

0:32:250:32:30

you support it?

Yes, but you have to

combine it with mixed supply. The

0:32:300:32:39

beta site, £3 billion, is on the

stamp duty cut. Unless you are

0:32:390:32:43

boosting supply % and having more

homes for social rent, it will only

0:32:430:32:50

make the situation worse.

So how

much more would you spend on

0:32:500:32:54

housing?

In our investment

programme, we have said we would put

0:32:540:32:56

more investment in. The allocation

for housing is 25 billion. The

0:32:560:33:01

increase for housing would be 8

billion, because that gives you the

0:33:010:33:04

chance to have more homes for social

rent.

How many more homes for social

0:33:040:33:08

rent would later be proposing?

100,000.

So you are going to be

0:33:080:33:14

adding to the money that the

government would borrow. Do you

0:33:140:33:17

think it is acceptable that the

Shadow Chancellor couldn't cite what

0:33:170:33:20

the current levels are in terms of

servicing the debt, never mind what

0:33:200:33:23

they would be under Labour?

I don't

think it's fair to ask the Shadow

0:33:230:33:26

Chancellor to pick out a figure from

the red book.

Hang on, which figure

0:33:260:33:31

in terms of the current levels of

servicing the debt?

The £46 billion.

0:33:310:33:37

Then you can do it. Is it acceptable

that the Chancellor can't?

There

0:33:370:33:43

would be a variability to the cost

of borrowing under a Labour

0:33:430:33:45

government. The point that John is

trying to make, which is worth

0:33:450:33:49

making, is that if you look at the

crucial topline news in the Budget,

0:33:490:33:53

the big downgrade to growth, the

country has to do something

0:33:530:33:56

different. And bringing forward

investment into infrastructure,

0:33:560:34:00

housing and transport is the right

thing to do. If you look at the long

0:34:000:34:03

term effect on the tax base of this

continuing, we will have huge

0:34:030:34:08

problems.

In terms of money for the

NHS, did you welcome the £2.8

0:34:080:34:13

billion proposal by Philip Hammond?

We want to see more than that. We

0:34:130:34:17

want to see something equivalent to

what the NHS itself has said it

0:34:170:34:20

needs. It is not always about extra

borrowing, there is also a point

0:34:200:34:25

around choices and priorities. More

money going to Brexit that the NHS

0:34:250:34:28

does not sound like the right thing

to do. More money going into alcohol

0:34:280:34:33

duty than fixing Universal Credit,

those are bad choices. If look at

0:34:330:34:39

the envelope the Chancellor had, he

has made poor choices.

What do you

0:34:390:34:42

say to it being not the right

choices?

You have a vast credibility

0:34:420:34:49

gap between a balanced approach, yes

we need a stimulus, but with overall

0:34:490:34:54

public finances. We have a Labour

Shadow Chancellor who reckons that

0:34:540:34:58

spending and borrowing pays for

itself. That is just not credible

0:34:580:35:01

and it is dawning on many people

that these are false promises. It is

0:35:010:35:05

a con.

What was a con about George

Osborne saying he would eliminate

0:35:050:35:10

the deficit by 2015 and it will now

not be eliminated until 2031.

Well,

0:35:100:35:15

that was a target.

A target that you

miss every year in terms of

0:35:150:35:20

eliminating it. And it was to be £35

billion. When you talk about trust,

0:35:200:35:26

what is the point of saying to

people, bear the pain now of

0:35:260:35:30

austerity because we are going to

remove it for future generations? It

0:35:300:35:33

is still going to be there.

Well,

hold on. That is based on

0:35:330:35:39

projections made in 2010. We would

say, look at the 3 million new jobs.

0:35:390:35:44

Look at the extra money we have made

sure working people have in their

0:35:440:35:49

pay packets. Look at the extra

investment in the NHS. If you

0:35:490:35:52

compare that what John McDonnell

said this morning he said that

0:35:520:35:56

spending and borrowing pays for

itself. That be credible.

Is

0:35:560:36:03

government spending and borrowing

now paying for itself?

The economy

0:36:030:36:07

has not hit rock bottom.

Our point

is, if you can get a bigger return

0:36:070:36:16

for the taxpayer by borrowing at

record low levels, that is something

0:36:160:36:20

you should consider. And that was

what was ruled out under the George

0:36:200:36:24

Osborne has Charter. Now members of

your Cabinet are coming forward with

0:36:240:36:27

plans on housing...

But not to say

borrowing pays for itself.

You said

0:36:270:36:34

earlier that that is perhaps what

Philip Hammond should have done, to

0:36:340:36:38

have thrown away the red box and the

red book in terms of constraint and

0:36:380:36:41

spent more.

I would reconfigure the

red box. The government has not

0:36:410:36:48

separated out current spending from

capital spending. The only way to

0:36:480:36:53

raise productivity, and it is a

puzzle, but the key thing the Bank

0:36:530:36:56

of England identifies is that you

have to raise investment. Investment

0:36:560:37:00

in things like hard and soft

infrastructure and human capital, if

0:37:000:37:03

you count that as capital spending,

you can borrow at very low rates and

0:37:030:37:06

invest in something which will be

paid off in the future. And you can

0:37:060:37:10

separate out from current spending

so that you don't scare financial

0:37:100:37:12

markets. That is something where he

could have done more, given how dire

0:37:120:37:19

our productivity prospects are. But

it does require reconfiguring how we

0:37:190:37:25

think about the deficit.

So is

Labour's plan credible if you

0:37:250:37:31

reconfigured the red box in the way

you have?

I think their plan goes a

0:37:310:37:35

bit further from the manifesto. The

sense of borrowing and nationalising

0:37:350:37:41

major infrastructure, there is a

huge cost associated there.

Which

0:37:410:37:44

they have not given us.

Yes. That is

a problematic area to me. I am

0:37:440:37:51

describing something which is more

straightforward. Private firms are

0:37:510:37:54

not investing in part because public

investment has been slashed to less

0:37:540:37:58

than 2% of GDP. It used to be over

3% of GDP before the crisis. Sorry

0:37:580:38:04

telecoms company cannot put in a

better fibre line unless the

0:38:040:38:08

government gives them that basic

structure. We can't have better jobs

0:38:080:38:11

in the future unless there is more

investment in technical education.

0:38:110:38:15

That is why there is a good argument

for putting investment in human

0:38:150:38:19

capital, people as well as hard and

soft infrastructure, and that would

0:38:190:38:23

go a long way without going into

some of the more politically

0:38:230:38:26

disputed areas.

But it is

interesting that Labour still trails

0:38:260:38:33

in terms of Corbyn and McDonnell

versus Hammond and May when it comes

0:38:330:38:37

to trust in the economy.

There are

eight points behind.

If you look at

0:38:370:38:43

under 50s, we now lead on the

economy, so we have seen a change in

0:38:430:38:49

perception. In 1997, we were

trailing on the economy and we still

0:38:490:38:52

won a landslide victory.

Is that

what you are predicting?

I wouldn't

0:38:520:38:58

go as far as that!

Thank you both

very much.

0:38:580:39:02

Now, "Trust me, I'm an Economist" -

it's not a phrase I suppose my guest

0:39:020:39:05

of the day Linda Yueh utters

everyday.

0:39:050:39:07

And economists have had

a rough ride of it of late.

0:39:070:39:10

Blamed for not predicting

the financial crisis nine years ago,

0:39:100:39:12

a good number then got criticised

for scare-mongering over what might

0:39:120:39:15

happen after Brexit.

0:39:150:39:16

But is that fair?

0:39:160:39:17

Here's Ellie.

0:39:170:39:23

It was a question that baffled lots

of us, even the Queen, who famously

0:39:230:39:28

asked, how did no one predict the

financial crisis? She got an answer

0:39:280:39:32

of sorts, and then said what we were

all thinking.

The people have got a

0:39:320:39:41

bit lax, have they?

Maybe it wasn't

that simple.

A bit like geologists

0:39:410:39:47

and earthquakes, we know where the

fault lines are, we have a good idea

0:39:470:39:50

of where the earthquake will happen,

but within a few years, we don't

0:39:500:39:54

know exactly when and which region

will be the most. It was like that

0:39:540:39:59

in the lead up to the financial

crisis. If you read any of the

0:39:590:40:03

journals and policy papers, it was

clear that we understood the risks.

0:40:030:40:06

We just didn't know exactly where

the earthquake hit.

Today a woman

0:40:060:40:14

rang the BBC and said she heard

there was a hurricane on the way.

0:40:140:40:17

Don't worry, there isn't. Here is

another analogy. Economists can

0:40:170:40:23

forecast based on certain

conditions, but we shouldn't think

0:40:230:40:26

of them as predicting the future.

There is another problem too.

The

0:40:260:40:32

essential fear of financial

economics is that you can't predict

0:40:320:40:34

things like the financial crisis

because it is in the nature of such

0:40:340:40:38

predictions that the result of

predicting it in a reliable way

0:40:380:40:41

would mean that it wouldn't happen.

So if I tell you the stock market is

0:40:410:40:45

going to drop by 20% tomorrow, then

you will not have your money in the

0:40:450:40:49

market tomorrow. So it will drop the

day before or the day before that,

0:40:490:40:54

so I will not be right and the crash

I predict will not happen.

So is

0:40:540:40:57

that what happened after the EU

referendum?

You have a situation

0:40:570:41:02

today where you have a Conservative

Chancellor and a Labour Chancellor

0:41:020:41:06

both saying to the country that

there will be a big hole in the

0:41:060:41:10

finances...

Brexiteers called a

product fear, a consensus among

0:41:100:41:13

economics types including the then

Chancellor that Brexit and the vote

0:41:130:41:18

to leave would damage the British

economy.

Economists overplayed their

0:41:180:41:22

hand significantly on Brexit in two

key ways. They claimed to be experts

0:41:220:41:26

about matters that they weren't

expert in, namely what some of the

0:41:260:41:31

political implications would be both

of staying in the EU and of leaving.

0:41:310:41:34

And secondly, when things didn't

play out as they expected, they

0:41:340:41:39

tried to suggest that that was

something to do with the economic

0:41:390:41:41

models that they were using instead

of taking on the chin that they had

0:41:410:41:45

got wrong what the economy believed

would be the long term implications.

0:41:450:41:51

Economics and predictions. That's

what this was about yesterday. The

0:41:510:41:55

Budget was full of forecasts and

policies based on forecasts. But

0:41:550:41:59

maybe if the politicians who don't

use economics properly.

The choices

0:41:590:42:05

they make may not fully reflect the

consensus of economics. They may be

0:42:050:42:09

a result of their own private

preferences, or the result of the

0:42:090:42:14

way they have to confront their own

parties, or the political agenda in

0:42:140:42:17

front of them. It seems to me that

the best politicians are ones who

0:42:170:42:21

can understand what the science

says, whether it's on global warming

0:42:210:42:24

or smoking or the impact of

introducing trade costs, and

0:42:240:42:30

confront that and design policies

designed to deal with the real

0:42:300:42:34

risks.

When it comes to predicting,

maybe it's not economics at fault,

0:42:340:42:38

but the economists themselves,

politicians and the public's

0:42:380:42:43

unpredictable behaviour that makes

it so difficult.

0:42:430:42:46

Joining us now is Joe Gladstone,

0:42:460:42:47

a behavioural economist

from University College London.

0:42:470:42:53

Why do economists keep getting it

wrong?

One reason is that it is

0:42:530:42:58

difficult to predict the future with

economic models because economists

0:42:580:43:01

want to have a theory of everything.

They want to turn people into little

0:43:010:43:05

robots that always try and maximise

their own well-being. But you and I

0:43:050:43:08

know that that is not how people

behave. Humans are irrational. They

0:43:080:43:13

make mistakes, and if these models

don't take that into account, what

0:43:130:43:16

do they tell us?

We know that humans

are not rational, so what is the

0:43:160:43:22

point of all this forecasting?

I am

not sure sometimes. You know the

0:43:220:43:27

phrase that economic forecasting

exists to make astrology look

0:43:270:43:29

respectable! The problem with policy

is that you need to have some basis

0:43:290:43:36

to decide how the economy will be in

the future. There is a need to make

0:43:360:43:41

forecasts, but I don't like the

excessive reliance on forecasts. The

0:43:410:43:44

other thing I don't like about

forecasts generally is that they

0:43:440:43:47

rely too much on simple models of

how people, if you have a tax cut,

0:43:470:43:53

people will spend more, but that is

not true. A lot of people save if

0:43:530:43:56

they are struggling. Why would you

spend more even if you have a tax

0:43:560:43:59

cut? If you put that together, it

requires rethinking the basis of

0:43:590:44:04

economic forecasting, but also

accepting that the likes of the

0:44:040:44:07

Treasury and the OBR need something

to say the economy is expanding or

0:44:070:44:13

shrinking, but we should not put too

much stress on it being our future.

0:44:130:44:16

And it is not just people who don't

behave in a linear way. Markets

0:44:160:44:21

don't always function properly. Some

would say they haven't functioned

0:44:210:44:24

well at all over the last decade.

That is true. People and markets are

0:44:240:44:30

imperfect and these models are not

good at distinguishing between them.

0:44:300:44:34

If we could all predict the future

with some wheezy model, we would set

0:44:340:44:38

up a hedge funds and be a

billionaire next year.

I would not

0:44:380:44:41

be sitting here.

It is just that

complexity, the chaos of all these

0:44:410:44:48

individuals with their complex minds

and personalities and

0:44:480:44:52

individualisms, and then the market,

which is also complex and follow

0:44:520:44:55

normal ways of doing things.

0:44:550:44:59

People want to see evidence of what

policies are based on and there has

0:44:590:45:03

to be some forecasting. Do we help

the situation by criticising it and

0:45:030:45:08

dismissing and saying - all

forecasts are wrong, so I'm it never

0:45:080:45:12

going to believe anything you say or

does it make the job of economic

0:45:120:45:16

forecasting more difficult?

First we

have to accept the world is

0:45:160:45:19

uncertain and we cannot know with a

huge degree of accuracy what is

0:45:190:45:23

going to happen in future, we have

to accept that. The best models we

0:45:230:45:28

have are probably from economists,

there is not an alternative, we

0:45:280:45:33

cannot go to psychologists or

sociologists and say - tell us what

0:45:330:45:36

the economy is going to do. We have

to accept the limitations of what we

0:45:360:45:39

have and figure out how you can

explain that to the public that the

0:45:390:45:43

world is uncertain and this model is

the best thing we have.

We wouldn't

0:45:430:45:47

be better off without economic

forecasting. How could it be be made

0:45:470:45:50

better? ? I think one way it could

be made better is right now it tends

0:45:500:45:55

to extrapolate a lot from the past.

Almost every single model is saying

0:45:550:46:00

what happened in the past.

If you

have not had a recession in the last

0:46:000:46:06

eight years you are unlikely to

predict one. So the first thing to

0:46:060:46:11

do is redress the reliance on

ex-traplation. Looking at Government

0:46:110:46:17

spending gives you a better in the

of US it is called of dynamic

0:46:170:46:23

scoring. You put it policy out and

cost tonne that basis.

Do you need

0:46:230:46:28

more time? Do you have a tax cut or

rise, when policies come and you

0:46:280:46:32

have in place for one or two years,

is it long enough to say it it has

0:46:320:46:37

worked or failed

It is tricky and

what I'm described also takes a lot

0:46:370:46:42

more preparation before you roll out

policies so you can decide on the

0:46:420:46:47

impact but politicians work on four

or five year cycles, and it

0:46:470:46:53

generally isn't a luxury they have.

And everybody says they have their

0:46:530:46:56

own economic expert to back up

whatever their policy is. You can

0:46:560:47:01

pretty well forecast and predict

whatever economics you like, because

0:47:010:47:04

there will be an economic expert to

back it up?

There is varyings in

0:47:040:47:06

opinion and it is possible to find

an speshgts who is likely to support

0:47:060:47:10

your case. But at the same time,

there is Bert and worse science.

0:47:100:47:14

Things are moving forward there, a

gold standard in terms of these

0:47:140:47:18

field experiments or natural

experiments, so, it isn't like we

0:47:180:47:20

are just walking around in the dark.

There is the science out there. The

0:47:200:47:23

problem is that that science is

complicated. It is difficult to

0:47:230:47:26

explain to the public. It is

difficult to turn into a policy

0:47:260:47:30

sound bite and so, that's really the

problem we have in politicians using

0:47:300:47:33

this information.

Thank you very

much. Well economics may be

0:47:330:47:36

difficult to forecast but I have to

say politics hasn't been that easy

0:47:360:47:39

to forecast either.

0:47:390:47:49

Is Germanys facing one of the worst

political crisis of its modern

0:47:510:47:53

history?

0:47:530:47:55

Angela Merkel's party have failed

to form a coalition.

0:47:550:47:57

Last weekend, efforts to forge

a three-way coalition

0:47:570:47:59

with the pro-business Free Democrats

and the Greens collapsed,

0:47:590:48:01

raising fears across Europe

of a prolonged leadership vacuum.

0:48:010:48:08

Today Germany's President has urged

the social Democrats. Led by former

0:48:080:48:13

EU president, Martin Schulz, to

reconsider their oppies to joining a

0:48:130:48:17

new grand coalition with their

Christian Democrat party. What are

0:48:170:48:19

the options for Germany now and what

impact does it have for the UK and

0:48:190:48:23

Brexit?

0:48:230:48:28

Joining me now are journalists,

John F Jungclaussen from Die Zeit

0:48:280:48:31

and Stefanie Bolzen from Die Welt.

0:48:310:48:32

How unpress departmented is the

situation in Germany now?

It is

0:48:320:48:38

unprecedenteded. We haven't had this

kind of situation but there are ways

0:48:380:48:41

to deal with T the constitution is

very clear about the next step that

0:48:410:48:45

needs to be taken here. -- to deal

with it.

Angela Merkel has suggested

0:48:450:48:49

she would rather have another

election. Well that's what she said,

0:48:490:48:54

than govern in a minority

government. How likely is it for new

0:48:540:48:58

elections? The is fluid. I wouldn't

bet on anything for the time being

0:48:580:49:03

but doesn't look like a new election

now. The reason being - for today,

0:49:030:49:07

tomorrow we could be in a different

situation. I like the caveat, in

0:49:070:49:11

temples predists. Dump -- in terms

of predictions.

But Angela Merkel is

0:49:110:49:21

in a comfortable position because it

is the SPDs, they cannot risk

0:49:210:49:26

elections, because the German public

sees them as the one that is have to

0:49:260:49:29

move. If they don't come into a

co-laylies with Angela Merkel or

0:49:290:49:34

support a minority Government and

therefore trigger new elections they

0:49:340:49:38

will be hammered in 2018

That is

That's the dilemma for the SPD. Is

0:49:380:49:44

Angela Merkel really in a

comfortable position. This must have

0:49:440:49:49

come as a shock, she was said

tonight leader to ruffal trump. And

0:49:490:49:57

it hasn't happened?

Yes -- to rival

Donald Trump. Well before the last

0:49:570:50:03

election her personal popularity

ratings were extraordinary. Over 52%

0:50:030:50:06

of the population favoured her as a

leader. Of course that was not

0:50:060:50:10

reflected in the outcome of the

election. But there is a great deal

0:50:100:50:15

of goodwill that people have and

that's why I think she would opt for

0:50:150:50:19

a new election, if she had it her

way.

Right she's obviously banking

0:50:190:50:24

on the fact that people voted for

parties perhaps thinking she would

0:50:240:50:28

walk it, would put their vote behind

her but it is a massive gamble to go

0:50:280:50:33

for another election?

It is,

It is,

it is something unprecedented in

0:50:330:50:38

Germany. The Germans don't want T

they don't want instable. Thankfully

0:50:380:50:43

the economy is going well. Data

growth is coming, low unemployment

0:50:430:50:46

it is not the economic pressure for

the time being but talking about

0:50:460:50:49

Angela Merkel, she has been there

for 12 years now, it was always to

0:50:490:50:53

be expected sooner or later people

thought she ought to go. The

0:50:530:50:56

question is, when is she going and

there is no successor at the horizon

0:50:560:51:00

for the time being.

Germany often

spends time putting coalitions

0:51:000:51:05

together and we don't quite have

that experience in this country.

0:51:050:51:08

Whep we had the coalition it

happened relatively quickly compared

0:51:080:51:11

to Germany. That does leave a bit of

a vacuum doesn't it, in terms of

0:51:110:51:15

Europe and when we look at Brexit,

what impact will it have?

Well, I

0:51:150:51:21

think it is one thing one cannot

repeat often enough on British

0:51:210:51:26

television, is that Brexit is not on

top of the list of any German

0:51:260:51:29

Government.

We've gathered that.

Good. I think what is more important

0:51:290:51:38

is issues that are coming up in

Europe next year, such as elections

0:51:380:51:43

in it lane the threat of the rising

-- Italy and the threat of the

0:51:430:51:47

rising populist right there. The

euro needs to be sorted out. There

0:51:470:51:51

is the issue of migrants who are

still drowning in the Mediterranean.

0:51:510:51:55

What Brexit has done to Europe, is

that Europe is coming closer

0:51:550:51:59

together. The 27 are closing ranks,

very successfully, I think. And

0:51:590:52:05

there are a lot of issues that need

sorting out and I think for those

0:52:050:52:13

issues, a weak government in Berlin

is a lot more difficult to sort out

0:52:130:52:16

than Brexit. I don't think Brexit

will be affected by this situation.

0:52:160:52:23

Except if the SPD under Martin

Schulz, the left-of-centre party

0:52:230:52:27

decide they want to get into a

coalition and there was to be a

0:52:270:52:31

grand coalition with Angela Merkel,

we know Martin Schulz is not a fan

0:52:310:52:35

of Brexit. Could he make things

difficult if he were part of a if

0:52:350:52:39

you tour German Government?

At the

end of the day in Britain there is a

0:52:390:52:44

lot of delusion about how much would

change if the Liberal Democrats

0:52:440:52:49

pro-business would be in the

coalition. It always be a very prong

0:52:490:52:54

pro-European Government. It won't

make much of a difference. It won't

0:52:540:52:57

make a difference for the December

council, whether Angela Merkel is

0:52:570:53:00

there or not. It is not in the hands

of the Germans to say - OK, you pay

0:53:000:53:04

£10 billion less, it is not.

Really?

But the Germans are so important.

0:53:040:53:08

There was much made of the

relationship at the same time

0:53:080:53:12

between David Cameron and Angela

Merkel and people thought she'd let

0:53:120:53:14

him down and there is still sort of

hope that Angela Merkel will be the

0:53:140:53:17

ones that will go over the heads of

everybody else and perhaps push

0:53:170:53:20

things along. When she's distracted

and it is not top of her list, has

0:53:200:53:24

it gone?

A lot was made of it in

Britain, yes, but not so much in

0:53:240:53:29

Germany and Berlin or Brussels.

Are

you worried about this dilemma,

0:53:290:53:34

really in Germany and this Ince

stability while -- instability while

0:53:340:53:41

she tries to decide for a coalition

or another election?

Well I'm more

0:53:410:53:49

worried now. Well Michel Barnier,

the EU negotiator he has delegated

0:53:490:53:56

authority a mandate given to him to

negotiate so on aspects that Britain

0:53:560:54:01

would like something more bespoke,

whether around Northern Ireland or

0:54:010:54:05

Ireland or the divorce bill or trade

deals, the thought was he could get

0:54:050:54:10

that authority, perhaps, from Merkel

or from Macron and so people should

0:54:100:54:13

matter. But if it turns out that the

EU is really, a really unified

0:54:130:54:20

force, and it doesn't matter who is

actually in charge, I think that's

0:54:200:54:23

going to make the British position,

you know, harder to read.

But

0:54:230:54:29

whatever point of the process you

look at. We are in the position

0:54:290:54:32

where Britain has to come up and pay

and agree on citizens' rights and

0:54:320:54:37

thor Northern Irish bored in phase 2

we might be in different territory

0:54:370:54:42

because national interests will kick

in and persons and people will

0:54:420:54:44

decide but that's not the point yet.

Right, thank you both very much.

0:54:440:54:49

So is it now "Funny Phil"?

0:54:490:54:53

That might be overstating it.

0:54:530:54:55

The Chancellor belied his

"Spreadsheet Phil" nickname

0:54:550:54:57

as he peppered his Budget statement

with a series of jokes

0:54:570:55:00

at the expense of everyone

from Theresa May and Michael Gove

0:55:000:55:02

to Jeremy Clarkson

and Lewis Hamilton.

0:55:020:55:03

I did take the precaution

of asking my right honourable friend

0:55:070:55:10

to bring a pack of cough sweets,

just in case.

0:55:100:55:12

LAUGHTER

just in case.

0:55:120:55:15

Mr Deputy Speaker, I shall first

report to the House on the economic

0:55:190:55:23

forecast of the independent OBR.

0:55:230:55:24

This is the bit with the long

"economicy" words in it.

0:55:240:55:26

LAUGHTER

0:55:260:55:30

Mr Speaker, if they carry

on like that, there will be plenty

0:55:300:55:33

of others join Kesa Dugdale

in saying, "I'm Labour,

0:55:330:55:35

get me out of here."

0:55:350:55:45

Mr Deputy Speaker, I know that

Jeremy Clarkson doesn't

0:55:500:55:53

like them, but there are many other

reasons to pursue this

0:55:530:55:55

technology, so today we step

up our support for it.

0:55:550:55:58

Sorry, Jeremy, but definitely not

the first time you've been

0:55:580:56:00

snubbed by Hammond and May.

0:56:000:56:03

More maths for everyone.

0:56:030:56:04

Mr Speaker, don't let anyone say

I don't know how to show

0:56:040:56:07

the nation a good time.

0:56:070:56:08

Joining us now is the the former

Labour media adviser

0:56:080:56:10

Ayesha Hazarika, who now works

as a stand up comedian

0:56:100:56:13

and Evening Standard columnist.

0:56:130:56:14

Someone shouted out - it's the way

you tell them, Phil. I suppose

0:56:140:56:16

delivery is everything. But actually

maybe from a low bar, some of the

0:56:160:56:20

jokes weren't bad?

I'll say fair's

fair, the bar is low, I know that, I

0:56:200:56:25

used to write jokes for the House of

Commons, it is like you are limboing

0:56:250:56:28

underneath it. I thought he did

quite well. Remember the odds were

0:56:280:56:32

stacked against him. He had a

horrific lead into the Budget,

0:56:320:56:35

everyone saying it is the worst

Budget preparation in the history of

0:56:350:56:38

time, he is hopeless for the chop.

So you forget, the House of Commons'

0:56:380:56:43

Chamber is actually mainly really

dull T comes alive on a number of

0:56:430:56:46

occasions and Budget Day is one of

them. It becomes a stage. It becomes

0:56:460:56:51

a place of theatre and what people

want is good political lines but

0:56:510:56:54

they want to have a bit of a laugh

as well. They at least want their

0:56:540:56:59

principal to try to make jokes, you

know the phrase "God loves a trier."

0:56:590:57:03

It is true on Budget Day in the

House of Commons.

How hard do you

0:57:030:57:07

think his joke writers had to work?

I would suspect they would've spent

0:57:070:57:11

a vast amount of time working on the

jokes. I actually got a nice text

0:57:110:57:15

from one of his advisors late last

night saying - gosh, you should have

0:57:150:57:18

seen the ones that didn't make the

cult.

I'd love to have seen those,

0:57:180:57:22

actually. You could use them

yourself, actually

Steady, on, Jo.

0:57:220:57:26

Sorry. In terms of delivery you can

only work with what you've got. Does

0:57:260:57:30

he deliver it well or not?

Well,

look, he is not a natural gag

0:57:300:57:37

machine, not Phil Giggles Hammond

but the way he worked them well, the

0:57:370:57:42

maths jokes, the best way if you are

not funny is to be self-deprecating,

0:57:420:57:48

everybody thinks he is dull and

boring, so he used that. But

0:57:480:57:51

remember, jokes don't mask the truth

behind the politics.

Do you think it

0:57:510:57:55

was a dissfraction the grim

backdrop?

I think part of it must

0:57:550:57:58

have been. Because he delivered the

jokes pretty early on and I think a

0:57:580:58:02

lot of us were sitting there

watching thinking - wait, did he

0:58:020:58:06

downgrade z...

He did it in about

one minute and then all talked

0:58:060:58:11

about.

I suspect this is all part of

the delivery. We'll face a brighter

0:58:110:58:16

future, let's accept some of this

and maybe have a few giggles. I have

0:58:160:58:21

to say sometimes I groaned a bit.

What about the strep sill, I thought

0:58:210:58:27

it was too staged -- strepsil.

It

was a bit laboured. Remember with

0:58:270:58:36

William Hague, it was a bit

laboured.

0:58:360:58:39

Time to find out the

answer to our quiz.

0:58:390:58:41

The question was, what important

milestone

0:58:410:58:43

has Shadow Education

Secretary Angela Rayner

0:58:430:58:44

just passed in her life?

0:58:440:58:45

Was it: She's just bought her first

house, she's got a degree, she's

0:58:450:58:48

passed her driving test or she's

become a grandmother?

0:58:480:58:50

So what's

the correct answer?

0:58:500:58:52

D.

She has become a grandmother at

the grand-old age of 37.

She's

0:58:520:58:56

Granegela.

Is that what she wants to

be known?

Yes.

0:58:560:59:01

That's all for today.

0:59:010:59:02

Thanks to our guests.

0:59:020:59:05

The economist Linda Yueh keeps Jo Coburn company throughout the programme. As well as reaction to Philip Hammond's budget from politicians they get the thoughts of Robert Chote from the OBR, Tom Newton Dunn from the Sun and Polly Toynbee from the Guardian.


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